Sonos IPO May Receive Boost After Speakers Add Airplay 2

It’s not often that a simple software upgrade can improve the prospects of an imminent tech IPO, but that could happen with Sonos, which announced support for Apple’s Airplay 2 technology Wednesday.

Unlike lo-fi bluetooth connections, Sonos speakers need a proprietary app to connect the hardware with streaming music sources and users’ libraries. While some users found the Sonos app’s user-interface challenging, everyone generally conceded it was the trade-off required for enjoying Sonos speakers’ superb sound quality.

Over time, Sonos let music services like Pandora and Spotify control the output on their speakers by allowing users to use the streaming apps for selecting songs and playlists. Sonos also ported Amazon’s voice-powered Alexa technology to its speakers last fall. But while the company became the first third-party hardware manufacturer to integrate Apple Music, Sonos owners who streamed from Apple still needed to make their musical selections through that clunky app.

With support for Airplay 2, Sonos speakers will be able to play songs on multiple speakers from the Apple Music app—and from any other iOS app that is compatible with Airplay 2. The Airplay integration is available on most Sonos speakers, including the Sonos One, Beam, Playbase, and the second generation Play:5. Supported speakers will also be able to use Siri to control Apple Music by voice.

The upgrade has been expected. Last fall, when Sonos added Alexa voice control to its speakers, it said support for Airplay would come sometime in 2018. Still, the timing of the news works well for Sonos, which filed to go public last week. Sonos is expected to be valued between $2.5 billion and $3 billion following the IPO.

Sonos’ brand-name recognition could help its debut, as well as the success of last fall’s successful IPO of Roku, another gadget manufacturer. But Sonos posted a net loss of $14.2 million last year and its revenue grew by only 10%, so it could use an extra boost as it approaches the public stock market.

The Apple Airplay integration could help investor confidence in the company’s future. The lack of a user-friendly interface has put off some Sonos owners from buying more speakers for their house or caused people to buy instead lower-fidelity but easier-to-use speakers like the Echo. Sonos’ big-sound-in-small-speakers design has won praise, along with loyalty of some users who install them in multiple rooms.

Perhaps more importantly, Sonos is strengthening its prospects by branching out beyond its reliance on Amazon’s Alexa. Sonos warned in its IPO prospectus that it could be hurt if Amazon ever disabled Alexa on the devices, noting it could do so at any time. With Airplay integration, Sonos adds Siri to its voice assistant mix. The company has also said support for Google Assistant is coming this year, although it’s still yet to happen.

Finally, Airplay integration will make Sonos speakers more attractive to people with iPhones. Amazon is estimated to have sold between 20 million and 30 million Echos. But Apple has 800 million iTunes accounts, the best gauge of how many people actively use their iPhones and iPads. Sonos’ Airplay integration will mean that, for most of those iPhone users, its speakers should be much easier to use now—and at less than half the cost of Apple’s HomePod.